Professionals And Patients For Customized Care v. Shalala

56 F.3d 592 (1995)

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Nature of the Case

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Facts

D promulgated CPG 7132.16 to address the manufacture of drugs by establishments with retail pharmacy licenses. Pharmacies that practice traditional compounding are regulated primarily by state law, and the drugs that they blend are exempt from many federal misbranding provisions. D became aware that establishments with retail pharmacy licenses were purchasing large quantities of bulk drug substances; combining those substances into specific drug products before ever receiving any valid prescriptions; and then marketing those drug products to practitioners and patients. This circumvented the much more stringent federal provisions for adulteration and misbranding. The CPG identifies nine non-exclusive factors that D 'will consider' in determining whether to initiate an enforcement action, but explains that the 'list of factors is not intended to be exhaustive and other factors may be appropriate for consideration in a particular case.' D issued CPG 7132.16 without complying with APA notice-and-comment procedures. D considered CPG 7132.16 to be for internal guidance and was intended to be used within the agency, primarily by D district offices, as an aid in identifying those pharmacies that manufacture drugs under the guise of traditional compounding. The CPG gave the district managers discretion to consider other facts as well in appropriate circumstances. It did not require mandatory enforcement, even if all of the factors were present. D claimed the CPG was an interpretative rule or policy statement. P filed suit in federal district court, claiming that CPG 7132.16 is invalid because it is a substantive rule issued in violation of the APA's notice-and-comment requirement. The court ruled that CPG 7132.16 is either an 'interpretative rule' or 'policy statement,' but it is not a 'substantive rule.' D was thus exempt from complying with the APA's notice-and-comment requirements, and CPG 7132.16 was validly promulgated. P appealed.